The historical decline in the VIX index currently seems to signal investor optimism after temporary trading in the trading in.
• VIX has halved
• China deal supported
• S&P 500 on recreational course
The US exchanges currently seem to experience one of the fastest relaxation phases in the history of market volatility: After weeks of high nervousness on the markets, the VIX volatility index has halved in record time – a historical event that interpret experts as Bullishes Signal, as reports, among other things, Dow Jones Newswires.
According to BESPOKE Investment Group, the decline of the VIX from over 40 points to under 20 within only 21 trading days has been the fastest movement since the introduction of the index in 1990. The VIX, often referred to as the “anxiety barometer” of Wall Street, reflects the expected fluctuation width of the S&P 500. pulled.
Trump-Zölle, China deal and the comeback of investor’s mood
The dramatic increase in VIX in April was triggered by the surprising introduction of extensive US tariffs to foreign goods – referred to by Donald Trump as a “liberation strike”. The subsequent uncertainty made the markets crash at short notice. However, after an agreement between the USA and China, a 90 -day reduction in tariffs – from originally 145 percent to 30 percent – now seems to be returned.
“While the markets reacted with exaggerated fear beforehand, they are probably now reacting with exaggerated optimism,” as Paul Christopher from Wells Fargo Investment Institutes explains as part of a telephone interview with Dow Jones Newswires. The tariffs are still high, but the markets would consider the temporary unification as a strong positive signal.
On May 13th, one day after the customs agreement between China and the USA, the VIX noted at 18.22 points – significantly below its historical average of 19.5. Analysts seem to see a sign in the return to this brand that the markets move again in a more stable, bullish environment. The VIX index is currently 20.87 points (as of May 21, 2025).
Outlook: S&P 500 on recreational course – recession for the time being postponed
The S&P 500 was on May 13th. For the first time since the end of February, book a plus over the year. Wells Fargo predicts a stand of 6,000 points for the end of the year – despite the continued risks of the economy and inflation. Goldman Sachs is also more optimistic: the institute raised its growth forecast for 2025 by 0.5 percentage points to 1 percent and reduced the probability of recession to 35 percent.
It remains to be seen whether this historical decline in volatility is actually the starting signal for a sustainable market rally. But the data and political relaxation initially seem to give reason to hope.
Editor finance.net